DIRECT TAX INCENTIVES
(In relation to Internal Revenue Service)

I. VENTURE CAPITAL FINANCING COMPANIES
(which meet the eligibility requirement in Act 680)

A. TAX HOLIDAY

1. Five years Tax Holiday on Corporate Income
2. Five years Tax Holiday on dividends earned
3. Five years Tax holiday on Capital gains.

B. FULL DEDUCTION OF INVESTMENT INCOME
Banks and other financial institutions which invest in Venture Capital Financing Companies can deduct the full investment from their income in a year of assessment.

C. CARRY-OVER LOSSES
Losses from disposal of shares during the five-year tax holiday period can be carried forward for five (5) years.

II. TAX STATUS OF GAINS MADE ON GSE
The tax exemption granted to capital gains made by companies listed on the Ghana Stock Exchange has been extended by a further 5 years to 31st December 2010.

III. REDUCTION IN TAX RATES

A. THE NATIONAL RECONSTRUCTION LEVY ( This was abolished in 2007)

Class A Companies
From 7.5% to 5.5 %

Class B Companies
From 5% to 2.5%

Class C and all other companies
NIL

B. Corporate Tax Rate

I. General Corporate Tax Rate                                                                   - 25%
                                                                                                           

II. TAX RATES BY SECTOR                                                                        Rate

A. Companies listed on the Ghana Stock Exchange                                     - 22%

B. Rural Banks (after 10 years Tax Holiday)                                                 - 8%

C. Free Zone Enterprises/Developers ( after 10 years of operation)            - 8%

D. Manufacturing Companies                                                       

i. Located in Accra/ Tema                                                                             - 25%

ii. Located in all other Regional Capitals                                                   - 18.75%

iii. Located outside Regional Capitals                                                        - 12.50%

E. Hotel Industry                                                                                           - 22%

 

F. Financial Institutions

i. Income derived from loans granted to Farming enterprises             - 20%

ii. Income derived from loans granted to Leasing Companies             - 20%

G. Companies engaged in Non- Traditional Exports                              - 8%

H. AGRO PROCESSING COMPANIES

i. Located in Accra/Tema (after 5 years tax holiday)                            - 20%

ii. Located in other Regional Capitals (excluding Tamale, Wa, Bolga)  - 10%

iii. Located in Northern, Upper West and Upper East                         - Nil

 

c. WITHHOLDING TAX RATES-FIRST SCHEDULE
OF ACT 592 (AS AMENDED)

 I. WITHHOLDING TAXES - FINAL
           
                                    TYPE                                                                                      RATE

a. Dividends paid to a Resident Person                                                                      8%

b. Fees to a resident part-time teacher, lecturer, examiner, examination
    invigilator or examination supervisor                                                                      10%

c. Endorsement fees to a Resident Person for recommending a product, or
    to promote sales at the expense of competing product in electronic, print
   media or otherwise                                                                                                  10%

d. Dividends and interest paid to Non- Resident Person                                             8%

e. Royalties, natural resource payment and rent to a Non- Resident Person              10%

f. Management and Technical Service fees to a Non- Resident Person                       15%

g. Premiums paid to Non-Resident Insurers                                                                5%

 

 

II. WITHHOLDING TAXES - ON ACCOUNT

                                    TYPE                                                                                      RATE

a. Interest to a Resident Person other than an individual                                             8%

b. Commission to a Resident Insurance, Sales or Canvassing Agent                           10%

c. Fees, emoluments, benefits paid in cash or in kind to a resident Director,
    Manager or Board member of a company or body of person who is
    not a full time employee of such company or body of person                                  10%

d. Commission to a Resident Lotto Receiver or Agent                                                5%      

e. Payment for goods and services to a Non-Resident Person with
    permanent establishment.                                                                                      15%

f. Payment for goods and services to a Resident Person                                             5%

 

D. Individual Tax Rates

1. Personal income tax on minimum wage has been abolished
2. Tax rate for those whose incomes are marginally above the minimum wage shall be 2.5%.
3. The top marginal rate is reduced to 25% for GH¢ 9600 and above. Additionally, the income bands have been are stretched as follows:

CHARGEABLE INCOME		RATE OF TAX
	GH¢
First	240	Free
Next	240	5%
"	1,200	10%
"	7,920	17.5%
	9,600	25%

IV. TAXATION OF OVERTIME INCOME

1. Income for qualifying junior employee - GH¢ 9,600 (Annual)

Tax rate for Overtime Income (monthly)

CHARGEABLE INCOME		RATE OF TAX
	GH¢
First	120	2.5%
Between	120 – 400	10%
Over	400	Add to salary and tax at rates prevailing to personal income tax rates

2. Overtime incomes Exceeding GH¢800 a month do not qualify for the concessionary rates in (1).

V. EXPANSION OF CARRY-OVER LOSSES
The Carry-over losses incentive has been expanded to cover agro-processing, tourism (companies registered with the Ghana Tourist Board) and ICT industries (software) Operators in these sectors can now carry forward losses incurred for five years.

VI. TAX CREDIT FOR EMPLOYERS
Government proposes to establish an incentive for companies employing fresh graduates from our tertiary institutions to improve their access to the job market. The Credit will be allowed for all enterprises irrespective of their size of operations, as follows:

Percentage of Fresh Graduates in Workforce		Proposed Incentive
Up to 1%		Up to 10 % of salaries/Wages of such employees
1-5%		30%
Above 5%		50%

These incentives will be additional to the normal allowable expenses
for wages and salaries.